Living in Singapore can often be described as a double-edged sword. On the one hand, Singapore has been consistently ranked one of the best places to live in the world. On the other hand, this accolade comes with a hefty price tag as Singapore is also known to have one of the highest costs of living in the world.
As Singapore citizens, we understand the struggles of trying to make ends meet in a city that is constantly evolving and growing. In this article, we will delve deeper into the rising cost of living in Singapore, analysing its causes and the measures taken by the government to combat it.
The inflation rate in Singapore has gone through seven periods of ups and downs, with inflation rising rapidly from 2004 to 2009 due to economic rebound and rising global commodity prices. As a result, the cost of living in Singapore increased, with public transport fares rising by 10 to 11 Singapore cents per ride for adults who pay by card and by 20 cents for those who pay in cash.
By August 2023, Singapore's inflation rate reached 4%. This increase in core inflation, which excludes accommodation and private transport, can contribute to an increase in other economic metrics like the Consumer Price Index (CPI) and cost of living index.
The CPI measures the average change over time in the prices paid by consumers for a basket of goods and services. When the CPI increases, it means that the cost of living is rising, as it reflects the increase in prices of essential goods and services.
The rising inflation has resulted in a decrease in the purchasing power of money over time, making utility and food prices more expensive in Singapore. This increase in the cost of living has affected Singaporean households in various ways, including reduced purchasing power for daily expenses, income erosion, and increased uncertainty.
However, it's also important to note that the Singapore dollar has remained relatively resilient against the buoyant U.S. dollar compared to its regional peers in Southeast Asia, showing the effectiveness of the government's measures to control inflation.
According to the 2020 Worldwide Cost of Living Report by the Economist Intelligence Unit, Singapore ranked fourth most expensive city to live in globally. The consistently higher costs of living in Singapore have contributed to its top ranking in terms of expenses for goods and services, especially for wealthy individuals.
The rising cost of healthcare and personal care is a significant contributor to the overall cost of living in Singapore. The cost of medical treatment in Singapore is one of the highest in the world, and this includes the cost of health insurance premiums.
While the cost of healthcare and personal care in Singapore can vary depending on various factors, on average, households in Singapore spend around $172 per month on outpatient services. Average hospital bills for surgical specialities range from $1,638 to $18,993.
However, it's important to note that the costs of healthcare in Singapore are on par with the quality of their services. Singapore ranks highly in terms of the quality of its hospitals and provides universal healthcare coverage. In fact, it's known that Singapore has one of the most efficient healthcare systems in the COVID-19 era.
Food prices in Singapore can be relatively high due to the country's heavy reliance on imports for more than 90% of its food. This reliance on imports makes Singapore vulnerable to fluctuations in global food prices, which can impact the cost of living for its residents. Rising global food prices, exacerbated by factors such as the Ukraine war, have contributed to increased food prices in Singapore.
The demand for housing in Singapore is high, and this has driven up the cost of both buying and renting property. The government's measures to cool down the property market such as the Additional Buyer's Stamp Duty (ABSD) and the Seller's Stamp Duty (SSD) also contributed to an increase in property prices.
The average cost of a home in Singapore is S$2,080,533, with HDB flats being the cheapest option at around S$532,768. Condos in Singapore average around S$1,100,000, and landed properties are the most expensive due to limited supply.
On the other hand, while rental prices in Singapore can vary depending on the location and type of property, Singapore's private rental homes still have the highest monthly rent in the region at $2,600.
The cost of utilities such as electricity and water has also increased over the years. This can be attributed to the fact that Singapore has limited natural resources and relies heavily on imports.
In fact, utility prices in Singapore, including electricity and gas tariffs, are set to increase in the next quarter. The electricity tariff will rise by an average of 3.7% from October to December. For the average monthly bill of a four-room Housing Board flat, this increase translates to an additional cost of $3.57. Gas tariffs will also increase, with the rate rising from 21.91 cents per kWh to 22.42 cents per kWh
Transportation costs in Singapore vary depending on the mode of transportation. The average price for a one-way bus fare is about S$1.60. Combining MRT (Mass Rapid Transit) and bus rides should cost no more than S$150 per month. Taxis are also considered affordable, with fares starting at S$3.00.
However, owning a private car in Singapore can be expensive due to heavy government taxes. The initial purchase cost, recurring costs, and petrol prices should also be considered. Parking, petrol, and toll charges can add up to around S$600 per month, and maintenance costs can range from S$500 to S$1000 per year. A new car can cost around S$150,000
The rising cost of living in Singapore can be attributed to several factors that collectively bring these results, such are as follows:
The high standards of living in Singapore can contribute to the rising cost of living through various factors but with an emphasis on seeking a better quality of life. With the basic needs of Singapore citizens already met, there is a desire for a better and more comfortable way of living. This demand for improved amenities and services can drive up prices. The pursuit of a higher quality of life also often involves higher property prices, as individuals seek larger and more luxurious accommodations.
The desire for a high standard of education contributes to the rising cost of living in Singapore as it necessitates significant investments in human resources due to the country's lack of natural resources. Singapore places a strong emphasis on education and has made significant progress in providing accessible and quality education to its population.
However, this commitment to education requires substantial investments in infrastructure, teaching staff, and educational resources, all of which contribute to the overall cost of living. The government's focus on human capital development and the need to constantly upgrade educational facilities and programs further add to the rising cost of living in Singapore.
Increased population density in Singapore can contribute to the rising cost of living in several ways, most notably competition for resources and limited space for amenities.
Higher population density means increased competition for resources such as water, electricity, and other utilities. The government needs to invest in infrastructure and utilities to cater to the growing population, which can lead to higher costs for consumers.
Moreover, as population density increases, the availability of public amenities like parks, recreational areas, and community facilities becomes limited. This scarcity may lead to higher costs for access to these amenities or the need to travel further to reach them, adding to the overall cost of living.
The lack of natural resources in Singapore contributes to the rising cost of living in several ways, most notably due to the constant need to import.
Singapore needs to import more than 90% of its food from over 170 countries and regions, which makes it vulnerable to food price inflation and export bans from neighbouring countries. This leads to higher food prices and increased costs for consumers.
Singapore also has to import water and electricity, which adds additional costs to the overall cost of living. The reliance on imports for essential resources drives up prices and contributes to the rising cost of living in Singapore.
High property and rental costs contribute to the rising cost of living in Singapore in several ways. For one, the surge in property prices, as indicated by the Urban Redevelopment Authority's rental index, leads to higher mortgage payments for homeowners and higher rental fees for tenants. This directly affects the expenses of individuals and families, making it more challenging to meet their housing needs.
Another is that the increase in property and rental prices is attributed to factors such as limited land supply and high demand. As a result, individuals and businesses have to allocate a larger portion of their income towards housing, leaving less disposable income for other essential expenses. This, in turn, adds to the overall cost of living in Singapore.
At Nimbus Homes, we understand these surges in owning or renting a property in Singapore, so we make sure to offer our move house service to our clients at affordable prices, thereby reducing the financial burden of moving houses while ensuring the process is hassle-free.
Our comprehensive moving-in services are one of the most trusted and reputable services in the country, and you have our word that you can receive our high-quality services at a reasonable price.
The high cost of owning a private vehicle can contribute to the rising cost of living in Singapore in several ways.
For one, the cost of obtaining a Certificate of Entitlement (COE) is extremely high and has reached a new record high of S$146,002 ($106,619) for larger vehicles like SUVs. This makes it difficult for ordinary citizens to afford a car despite the country having a high number of millionaires.
Another is that the high cost of owning a car directly affects transportation costs, which can be a significant expense for individuals and families. As a result, many Singaporeans rely on the excellent public transport network, which is highly encouraged by the government. This, in turn, can lead to higher demand for public transport services, which can increase their prices.
Finally, the government's focus on minimising traffic and reducing emissions through the quota system contributes to the high cost of owning a private vehicle.
The Singapore government has implemented several measures to offset the rising cost of living. Here are some of the government subsidies provided for such purposes:
The government has increased the amount of the Assistance Package (AP) from $6.6 billion to $9.6 billion to help Singaporeans cope with the rising cost of living. This includes cash payments for eligible adults and seniors, doubled U-Save rebates for eligible households, and top-ups to child development account and post-secondary education account.
The government announced a $1.1 billion support package aimed at providing financial relief to lower- and middle-income families affected by rising costs of living. This package includes cash payouts, vouchers, and rebates for service and transport charges. It is targeted at pensioners, lower-income families, and eligible public housing households.
The government will also provide an additional $1.1 billion Cost-of-Living Support Package to provide relief for all Singaporean households, with measures such as increased U-Save rebates and grocery vouchers. These subsidies are aimed at helping Singaporeans cope with the rising cost of living.
In conclusion, the rising cost of living in Singapore is a complex issue that requires a multifaceted solution. While the government has implemented several measures to offset the rising cost of living, there is still more that can be done.
As Singaporeans, we also have a role to play in managing our expenses and adopting sustainable practices. By working together, we can tackle the rising cost of living in Singapore and continue to enjoy the many benefits of living in this great city-state.